Ripoff Alert #5 – Child Identity Theft Edition

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Child ID Theft

In last week’s Ripoff Alert I talked about adult identity theft and some of the ways you can prevent it from happening to you. This week I want to focus on a topic that some of you may not even know exists: child identity theft.

Here’s a short video that explains what child identity theft is and how it happens. According to AllClearID.com (the people who made this video), children are 35 times more likely to have their identities stolen than are adults. What’s more, about 1 in 10 children have had their identities stolen at least once. As if parents need more to worry about when raising their kids.

As you see in the video, a child’s Social Security number is a blank slate. Criminals can effortlessly open new loans, cell phone accounts, or credit cards using your child’s SSN. Because there’s no system to match names and dates of birth to SSNs to verify identity, companies often only require a cash deposit when opening accounts. What this means is that your child could have a mortgage in his or her name while still in diapers.

Child ID theft normally isn’t detected until the child attempts to apply for student loans or sign an apartment lease as a teenager. To make matters worse, the three credit bureaus aren’t interested in helping to prevent this crime. All they’re interested in is building information on you and selling it – accuracy isn’t their priority.

Until this year, there really wasn’t a way for parents to protect their children against ID theft. AllClearID now offers ChildScan, a free service that detects fraud from many sources and sends you monthly updates via email.

What’s in it for them? This is a “freemium” model, which means they offer a basic level of protection for free alongside a premium version that costs $15 a month. The premium version offers identity repair help and various levels of insurance. The basic free version is probably sufficient for most people.

This service seems to be comprehensive – they search not only credit reports but also employment and medical records and utility accounts for any use of your child’s SSN.

Children are prime targets for ID theft and are more likely than adults to have their identities stolen. Because the credit bureaus and various levels of government don’t care about our children, it’s important to be proactive in protecting them. This new service makes it much easier for parents to protect the identities of their children.

For a real-life child ID theft story, see Michelle’s post over at Making Sense of Cents. She explains how someone bought a house in her name when she was 13. 

20 thoughts on “Ripoff Alert #5 – Child Identity Theft Edition

  1. I was just going to mention Michelle’s post! My boyfriend’s brother was also a victim and someone opened up credit cards in his name when he was 9.

    Thanks for pointing out this website – I’m going to send it to my mom and friends who all have young-ish children.

    • I’m sorry to hear that his brother was a victim. Sadly, this happens to children much more often than adults. Before writing this post I assumed it happened to adults more often because we hear about these cases more. But 35 times more likely?! Wow.

  2. The title of this series rocks first off. I am definitely going to be checking it out.

    As far as theft protection for your kids, I haven’t even heard of that. I don’t even know we have this in Canada. I am going to have to do some research.

    • Thanks, Miss T! I love input from my readers, both positive and negative.

      I’m not sure if this happens in Canada as well, because I’m not familiar with the credit reporting system there. But it’s worth checking into because of the amount of damage it can cause. You’ll have to report back after your research!

    • It is a scary thing. My point to this post wasn’t to scare anyone, but instead to educate parents about a potential danger that’s more common than we think. Until now there wasn’t a good solution to the problem. Now that AllClearID.com has a free, effective offering in the marketplace parents can fight back against the criminals.

  3. That’s pretty disgusting that scammers would target children like this. Some people just have no conscience. And you’re definitely right that the credit bureaus would not be interested in trying to prevent this kind of stuff. For them, the more of these types of scams that exist, the more money they are bound to make. Then people get all paranoid and pay for their protection services and pay to check their credit reports more often. I hadn’t really thought about that side of the credit reporting business, but now I’ll feel a little slimy if I promote those kinds of products on my blog.

    • I completely agree. Scamsters have little regard for who their victims are. They’re simply on the hunt for easy access to names, dates of birth and Social Security numbers they can use to commit fraud.

      You make an interesting point about the “fear cycle” that exists with the credit reporting agencies. We’re afraid of having our identities stolen, but we’re more afraid of not doing anything about it. So often we pay $10 or $12 a month for worthless credit monitoring services, and that’s pure profit for the credit bureaus.

    • I agree. We’re dealing with criminals though, so they often don’t care who their victims are. They won’t hesitate to target children if that’s the path of least resistance.

    • Yeah, I for one was shocked that it happens to kids so much more often than to adults. You just don’t hear about child ID theft cases. The main reason I think that’s the case is that parents don’t often find out about it until a decade or more later when the child needs student loans. I’m hoping this new service will help parents better protect their kids.

  4. I think some of the problem with child identity theft is sometimes the parents are the one who are doing it. Not proud to admit, but I know someone who put utilities bills and such in their childrens names.

    • Parents taking advantage of their own kids…wow. That’s a new low. I’ve heard that the majority of ID theft cases occur within families. If you’ve had your identity stolen, chances are you know the perpetrator. But parents preying on their children, I don’t even know what to say.

  5. This may be somewhat off topic on ID theft, but if its so easy to take out credit for a child, why not take out credit early for your kids, not to prey on them, but to build a strong credit history for when they get old enough to give them a good credit kick-start?

    • That’s a really interesting thought, and one angle I hadn’t considered before. I suppose you could try applying for a credit card in their name, and if it goes through just cut up the card and forget about it. Better yet, use it twice a year to keep it active in their credit mix.

      On second thought, you’d probably have to lie a little on the credit application, particularly where it asks for date of birth. Nobody would give a 5 year old a credit card!

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